Merrill Lynch's Next-Gen console prediction

[avaya]

This to me is the key take away and I've yet to see anyone disagree with it. Instead we attack the credibility of the analysts, the posters agreeing with the analysts, or the exact dollar figure of the analysts.

.Sis

I don't think anyone doubts the 360 will be cheaper to make. The key question is just how much cheaper?

Is it hand over fist cheaper as ML and NKC are alluding to or is it moderately cheaper?

 

[Sis]

What else are people supposed to do? I don't think anyone disagrees with the overall sentiment of the article, but the fine details are dubious at best. You know as well as I do it's the details that B3D likes to pick at. It seems much of this thread has been pretty valid conversation talking about what the actual costs could be and where they could go wrong -- most of the thread has been well manored and doesn't smell of damage control as much as it does trying to get the truth of the matter (because it happens to be an interesting topic).

I don't see the problem in agreeing with the sentiment but questioning the details.

Then you and I have a different impression of this thread--you sure you've read the whole thing?

.Sis

 

[Powderkeg]

Alright powderkeg, then please tell me which other company has a PS2 on the market, a PSP, a own fab it's devoting to these two products and using them at the same time to gain in experience and infrastructure advantage to shift significant resources onto a PlayStation successor, which they are again, utilizing different factors to their advantage as redundancy within a chip to improve yields. Heck, name me a company that is bringing out a mass-market-capable device that are striving for synergy among their products and with that will improve yields AGAIN since they can still use CELLs with a larger defection rate for those products?

Which do you think sells more. Game systems or televisions? I'll give you a hint, 120 million new TV's per year.

And TV's use chips just like game consoles. Sure, those chips might do different things, but does that really matter when you are talking about production costs? I don't think the cost to produce motherboards and chips is any different just because it's a PSP instead of a digital television.



Never mind. I keep forgetting Sony is the only company in the world who produces electronics, and nobody on earth has anything remotely similar to the facilities and expeses that they do. And nobody is ever going to tell a company that specializes in financial planning how much their expenses are either.

I'll just ignore Toshiba and Samsung over there in the corner to help your fantasy ring true.

 

[Carl B]

Great point Powderkeg, exactly. Sony and Toshiba will both be using Cell in TV's as well; crank down that Cell cost even further!

 

[jvd]

This to me is the key take away and I've yet to see anyone disagree with it. Instead we attack the credibility of the analysts, the posters agreeing with the analysts, or the exact dollar figure of the analysts.

.Sis

Its apparent from the very first post in this thread that the thread was meant to cast doubt on the numbers and through that doubt on the final point of the ml and nikko (sp?) group finds .

If you've followed these forums sony fans have been very out spoken that there is no way the ps3 costs more than the xbox 360. This debate has been going on for along time even with people claiming sony will get things so dirt cheap because they make them.

Many of us have known this is complete bs as if you get things at such a reduced cost by making them yourselves , ati and nvidia would have thier own fabs . Many of us know that when listing the costs of both systems the xbox 360 would in fact be cheaper and will continue to be cheaper through out its life .

Once again this however is not something the sony fans wnat to hear and thus the reason for them continuing to argue about this subject with unkown sources and things that might or might not have been said about a diffrent subject to try and cast doubt on these reports .

Because the simple fact is that more systems are sold at the 200$ and under price point than the 400$ price point and whichever company htis that price first has a major advanantage in picking up casuals .


This thread shold have really been locked from the first post . I don't believe you should start a post with this

OMG! So they lol... I can't stop lol... So they think because MS's money is long that this will push them to win the next-gen battle? Oh Merrill Lynch you have some learning to do. I know everyday posters that can predict better than this. This is so funny. How do you guys interpert this?

To me this is the very definition of trolling .

 

[mckmas8808]

Which do you think sells more. Game systems or televisions? I'll give you a hint, 120 million new TV's per year.

And TV's use chips just like game consoles. Sure, those chips might do different things, but does that really matter when you are talking about production costs? I don't think the cost to produce motherboards and chips is any different just because it's a PSP instead of a digital television.

Ding, ding, ding, ding, ding, ding, ding, freaking ding, ding, dingggggg!!!! You finally got it. Wooo! That took a while but at least we made one person understand what's been said for 12 pages.

YES!!

 

[nelg]

Let me ask you, how do you factor in this difference? What about the royalities or the expenses that are Microsoft is facing solely on the fact of producing their product with the help of partners like IBM, ATi & Co while Sony has their own fab? Did they also take into account that Sony invested massively into their own fabs & R&D costs? That these fabs are not only for PS3 but for other products as well? And that because they have their own fabs they also have direct control over the fabbing proccess which can result in strategic cost savings over time as seen with the PS2? And if they've considered all of these in their analysis, what numbers did they use? $$$ x or $$$ y - and why? Based on what? Based on their humble experience? Yeah right, give me break.

Maybe they considered the probable fact that Sony is not a low cost producer of chips. I would wager that at anytime you would be able to have a contract manufacturer produce a chip for less money that Sony could itself.

 

[Metal]

Wow what a thread based on speculation and opinion. Ugh it's a higher level than the kids sites like GAF, but it still reaks of ******ism.

 

[Sis]

Great point Powderkeg, exactly. Sony and Toshiba will both be using Cell in TV's as well; crank down that Cell cost even further!

I'm holding you to this: Xb predicts that Cell will be used in a 120 million TVs every year.

.Sis

Just kidding.

 

[Carl B]

I'm holding you to this: Xb predicts that Cell will be used in a 120 million TVs every year.

.Sis

Just kidding.

LOL

Anyway since there seems to be a break from the battle right now in this thread, I want to reiterate my own belief that indeed the 360's component costs will come in below PS3's, and remain there for a couple of years, if not throughout.

 

[Shifty Geezer]

If you've followed these forums sony fans have been very out spoken that there is no way the ps3 costs more than the xbox 360. This debate has been going on for along time even with people claiming sony will get things so dirt cheap because they make them.

Actually I think the debate has been more a case of how much will PS3 cost, rather than is PS3 cheaper than XB360. I think most expect PS3 to be more expensive than XB360, but not by the huge numbers some quarters are suggesting. For a company that can make it's own components and get most of them all at cost, producing a system of similar tech levels to a rival who buys in all their parts, it's pretty crazy to think PS3 will be 50% more expensive say to produce.

But as you say it's old ground and not worth debating again and again. Everyone's said their piece. I've heard both side and agree with points made on both sides. I don't agree with these analyst figures though, but more out of skepticsm than industry insight. To be honest I've no idea what it costs to make a chip, so for all I know $188 a Cell is bargain basement pricing!

 

[scooby_dooby]

I think many pro-sony guys are using the fact that Sony produces it's own chips as some sort of universal excuse that they can include any technology, no matter how expensive and somehow just because they have their own fabs that it's suddenly drastically cheaper to produce.

BR drives STILL have not even launched in North America, it's extremely expensive technology to manufacture right now. In addition, if BR doesn't win the format war Sony is stuck with a technology they cannot cost-reduce over time in a meaningful way, regardless of whether they have their own fabs or not.

The also have CELL that may or may not make it's way into consumer electronics(The EE sure didn't). If not, many of the arguments for Sony recouping losses fall to the wayside, and they're stuck with an expensive CPU.

ML pegged BR at $101 or so to produce. There's companies that specialize in nothing but estimating hardware costs, and I'm sure ML went to one of these companies for an analysis, and I'm sure that estimate is pretty close to the truth, not complete rubbish like many are claiming.

 

[Carl B]

Well Scooby ML also pegged Cell and RSX at $101 each, but here they deviate from that pretty substantially. Who am I going to believe, ML or ML?

I'll choose neither.

The arguments I've made stand; my biggest problem is they claim Cell will cost more than RSX. It simply doesn't make sense.

 

[Alpha_Spartan]

Wasn't the EE supposed to replace Pentiums? Secondly, where's my EE-powered toaster? Then again, it might be quite painful eating jaggy waffles...

 

[Alpha_Spartan]

Well Scooby ML also pegged Cell and RSX at $101 each, but here they deviate from that pretty substantially. Who am I going to believe, ML or ML?

So ML can't revise their forcasts based on updated information? Wouldn't that be the correct thing to do?

 

[Carl B]

So ML can't revise their forcasts based on updated information? Wouldn't that be the correct thing to do?

Alpha read this post and explain carefully whatever reply you might come back with to me: Link

 

[Sis]

So ML can't revise their forcasts based on updated information? Wouldn't that be the correct thing to do?

No, his point is: if they were wrong before, they could very well be wrong now.

.Sis

 

[Bobbler]

And around and around we go.

 

[Shifty Geezer]

Wheeeeeeeee! It's fun! Makes me dizzy! Make me laugh . I wanna go again. Sony own their own fabs so can produce Cells at cost price. Even if Cell doesn't find it's way into all and sundry devices they can use it for other chips. MS have to pay markups for all their chips.

Wheeeeeeeee!

 

[Mintmaster]

I think 3.2 GHz is going to be a walk inthe park for these chips - have you seen the schmoo for them?

I never said it wouldn't be. I just said low clock graphics processors and high clock CPU's can't have the same transistor density.

Also it's not a good comparison to use NV vs R vs AMD series chips; the architectures and the processes of different fab houses all play a role. NV suffering with a bad IBM process back in NV30 days is just one example of freak occurence and deviation from the norm.

I could keep giving you examples all day. NV30 was no bigger than it should have been, and it's poor performance had to do with architecture, not process. It's a fully valid example with nothing "freak" about it in terms of transistor density. I could cite R520 vs. Winchester, and again the density is about 30% more in the former. Prescott is higher density than Winchester, but it has a lot of transistor-dense cache.

But even with all of that aside - and I grant that the die sizes might be similar in size in the end due to different densities, certainly you understand where Cell with larger economies of scale and the ability to withstand defects should come in naturally lower in price to RSX, right?

Umm, why? RSX and cell will have very similar volume, since cell sales beyond PS3 will be relatively light. RSX is so closely related to G70 that it's yeilds will be easy to get high, relatively speaking. G70 is already hitting 500MHz+ (judging by third party clock speeds and rumours of a 550MHz 7800GTX) on a 0.11 um process.

And to say nothing of the fact that on the same process, with ~70 million more transistors, and using the EE and GS as precedent with Sony, I fully expect RSX to be larger as well.

I've already explained why this is unlikely to be so by any significant margin. EE and GS is irrelevant - NVidia is supplying the graphics this time.

I mean c'mon, this most recent BOM has the Cell at over three times the cost of RSX in certain places. WTF?

I see $160 vs $100 for Cell vs. RSX initial cost. I suppose you looked deeper into the document than me, but the final numbers are what matters.

Look at how big GPUs are in the last few years, and how the price of the whole card compares with CPUs. The GPU cores are nearly always bigger, and cost less. NVidia and ATI prefer more transistors to higher clock speed due to the parallelizability of graphics, so they make big, dense chips and sacrifice clock speed to get yields acceptable. CPU makers like high clock speed, so they sacrifice yields to get it.

Finally, IBM's cut for these chips will be much bigger than what ATI/NVidia/TSMC/NEC/Toshiba will take for these chips.


In any case, the point of this article is to compare XB360's price against PS3's. Cell has over 40% more transistors than Xenon, and when you take into account that larger chips have lower yields, $160 vs $100 for Cell vs. Xenon is very fair. If you think Cell should cost 30% less, then Xenon will cost 30% less as well. That makes the PS3 44% more expensive at launch than XB360 instead of the 46% currently in the report. Big deal.